Irish Ministers Hold Crisis Talks as Allies Quit

Published August 1, 2011

Reuters

Ireland's government looked close to collapse on Monday after the junior coalition partner said it would withdraw support after next month's budget.

The decision by the Green Party triggered calls from opposition leaders for a snap election and forced Prime Minister Brian Cowen into crisis talks with senior members of his Fianna Fail party. He was due to make a statement at 1900 GMT.

Pressure is mounting on Cowen -- finance minister during the boom years immediately preceding Ireland's current economic and financial crisis -- to resign immediately over his handling of an IMF/EU bailout request. At least four members of his own party called for Cowen to go.

Ireland on Sunday requested a bailout from the European Union and IMF, likely to be worth around 80 billion euros, to shore up its banks and budget against the effects of the global credit crunch. Cowen said early last week the government was not in talks about a bailout.

"The people of the country do not trust him ... I believe his credibility is in tatters now and the honourable thing for Cowen to do now is to stand down," Fianna Fail politician Noel O'Flynn said.

A snap election would delay a crucial 2011 austerity budget, due to be unveiled on Dec. 7, and so hold up any aid package.

Cowen's junior coalition partners, the Greens, said early on Monday they would support the government only until the budget was passed and the EU/IMF bailout was in place, and called for an election in January.

BUDGET IN DOUBT

But two independent members of parliament on whom Cowen relies for support then said they were unlikely to support the 2011 budget, putting its passage in doubt.

Cowen's government is imploding amid national outrage at the the economic crisis, the bailout and a draconian austerity programme set to last for another four years.

Opposition parties demanded an immediate dissolution of parliament.

"What is needed now is an immediate general election so that a new government, with a clear parliamentary majority, can prepare the four-year economic plan, complete negotiations with the EU and IMF and frame a budget for 2011," Fine Gael leader Enda Kenny said in an emailed statement.

Labour, Fine Gael's likely coalition partner in a new government, also called for parliament to be dissolved at once.

DELAYS

Independent member of parliament Michael Lowry said he would support the 2011 budget only if the main opposition parties, Fine Gael and Labour, took part in devising it, which is highly unlikely.

Asked if he was concerned that an immediate election would delay the budget and IMF/EU negotiations, Lowry said: "Our government has said on numerous occasions that we are sufficiently resourced and funded up to next year."

Independent Jackie Healy-Rae said he was also unlikely to back the budget.

The adoption and implementation of a deficit-cutting budget is usually a condition for EU/IMF aid payments.

The government is expected to announce on Wednesday that it will cut the minimum wage, slash social welfare spending, reduce the number of public employees and add a new property tax and higher income taxes.

Cowen said the government's four-year economic plan, to be announced on Wednesday, would involve 10 billion euros in public spending cuts and 5 billion euros in tax rises, on top of two years of harsh austerity and recession already endured.

Unions have warned this could spark civil unrest: a student demonstration over planned fee increases turned violent earlier this month, and unions have organised a march to protest at the planned austerity measures on Nov. 27 in Dublin.

"I think it (an election) would be desirable because the country is in a hopeless mess at the moment and it is affecting an awful lot of people," said Doreen Campbell, 73, a retired teacher.

But she was doubtful whether a new government would offer much change: "It will just be the same circus with different clowns."